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Relativity Media filed for bankruptcy protection yesterday against a swarm of disgruntled investors and other creditors, Variety Magazine reported today. The 11-year-old company that founder Ryan Kavanaugh had styled as a “next-generation global media company” will be sold at auction, a statement from the company said. The upcoming sale will center on the enterprise’s film and television units. Left outside of the insolvency action are Relativity Sports; Relativity EuropaCorp Distribution, a joint venture with the European film operator; and Relativity Education. All those units will continue on as independent concerns. The company’s fashion operation, M3/Relativity, was shut down this week and its employees laid off on Wednesday. Kavanaugh and his board proposed the immediate auction of the company, which stated liabilities of up to $1 billion.

Lehman Brothers Holdings Inc., which collapsed nearly seven years ago, increased its estimate of how much money it will recover to $92.2 billion, thanks to gains in real estate, derivatives and private-equity investments, Dow Jones Daily Bankruptcy Review reported today. In a Wednesday court filing, Lehman increased the number, which is net of operating disbursements, by $1.8 billion from its last quarterly estimate. Such increases have been a hallmark of the failed bank since it collapsed into bankruptcy in 2008. Of the $92.2 billion, Lehman already has paid out $72.4 billion to so-called third party, or non-Lehman, creditors. In April, Lehman made its seventh distribution to outside creditors, paying them $6.3 billion.

A federal judge yesterday rejected the request of abuse victims to extend a deadline for bankruptcy court claims against the Archdiocese of St. Paul and Minneapolis as the deadline will remain Monday, MPRNews.org reported yesterday. The creditors’ committee in the archdiocese bankruptcy case, composed entirely of clergy sex abuse victims, had wanted Bankruptcy Judge Robert Kressel to push the deadline back to May 2016, contending that the archdiocese had provided inadequate notice of the Aug. 3 deadline and that victims might need more time to file. The panel also argued that pushing back the deadline would expedite a settlement and provide more insurance money for abuse victims. As of late Wednesday, more than 400 creditors had filed claims. Abuse victims accounted for more than 250 of them. The judge said extensive notice of the cut-off date had been given by the archdiocese and through the media and other channels.

Colt Defense LLC 's preparations to test the market at a bankruptcy auction have added to creditor anxieties about the unsettled state of the lease on the gun maker's manufacturing plant, Dow Jones Daily Bankruptcy Review reported today. When it filed for chapter 11 bankruptcy protection in June, Colt was determined to put itself up for auction in August, with private equity owner Sciens Capital Management as lead bidder. Sciens took its buyout offer off the table after a bondholder coup shifted the balance of power in the case against the equity stakeholder. Colt is moving forward with the auction plan despite the lack of a lead bidder to set a floor price and despite uncertainty about whether the gun maker will be evicted from its Connecticut plant, bondholder lawyer Jeff Jonas said at a court hearing Wednesday.

A former structured finance partner at Dewey & LeBoeuf said he left the firm in late 2010 with a group of other attorneys because he was not paid what he was promised and only learned of Dewey's 2010 debt offering to investors through a client, the New York Law Journal reported yesterday. "At that point, I realized the firm was in significant financial distress and it was not a place where I wanted to have my practice," said Howard Schickler, testifying on Tuesday in the criminal trial against Dewey's former chair Steven Davis, former chief financial officer Joel Sanders and former executive director Stephen DiCarmine. Schickler, who said he has advised on many private placements himself, said that he believed the firm was in distress because if Dewey could not pay its own partners, it was difficult to see how it could pay back investors from the private placement. The Manhattan District Attorney's Office has accused the defendants of defrauding and stealing from the firm's lenders, investors and others through a series of fraudulent accounting entries to hide Dewey's true financial conditions.

A federal judge has dismissed a lawsuit accusing Herbalife Ltd and its chief executive officer of misrepresenting the weight-loss and nutritional products maker's sales practices as legitimate when the company was "at its core" a pyramid scheme, Reuters reported yesterday. U.S. District Judge Dale Fischer in Los Angeles, who dismissed a version of the complaint in March, said on Tuesday that the Oklahoma Firefighters Pension and Retirement System did not show the defendants defrauded shareholders by concealing the company's inability to track retail sales. The judge also said that CEO Michael Johnson's reducing his Herbalife stake by a net 12 percent over roughly one year, while "undeniably large," did not raise suspicions, nor did disclosures that top executives expected "some form of disciplinary action" over the company's business practices. "Herbalife openly disclosed that it was susceptible to legal challenge precisely because its practices occupy the gray area between legitimate multi-level marketing company and illegal pyramid scheme," Judge Fischer wrote.

Trump Entertainment Resorts Inc. received a judge’s approval to keep control of its bankruptcy case into early next year, as well as the right to transfer to Trump Taj Mahal the financing agreements related to slot machines moved from the shuttered Trump Plaza, the Wall Street Journal reported today. Bankruptcy Judge Kevin Gross in orders signed on Tuesday approved Trump Entertainment’s request to extend until Dec. 3, 2015, the amount of time it has to file a reorganization plan without the threat of rival proposals, and until Feb. 3, 2016, to solicit votes on such a plan. Without the approvals, those periods would have expired on Aug. 5, and Oct. 6, respectively. While Trump Entertainment already has a plan in place that would put the company in the hands of top lender Carl Icahn, the company is still waiting for the plan to become effective. Part of the deal includes the rejection of collective bargaining agreements with the Taj Mahal’s union workers, which the union is appealing.

Former investors in the railway behind a deadly 2013 train derailment face a demand to return nearly $14 million in allegedly improper dividends on the grounds that the company was in financial trouble years before its bankruptcy filing, Dow Jones Daily Bankruptcy Review reported today. The bankruptcy trustee winding down the Montreal, Maine & Atlantic Railway Ltd. on Monday brought a lawsuit against the investors, which court papers show include a company with ties to the railway's former chairman. The lawsuit aims to show how, years before the accident that claimed 47 lives and partially destroyed a small Quebec town, the railway was in financial distress.

The Export-Import Bank of China is joining China Construction America Inc. in seeking a dismissal of Baha Mar's chapter 11 of case, showing a unified front against the Bahamas resort's restructuring bid, Dow Jones Newswires reported yesterday. The Chinese bank, in its first official move in the resort's U.S. bankruptcy case, filed the motion to dismiss the chapter 11 case on Monday. The bank, which has lent the project $2.4 billion, says that a dismissal "will clear the path to an efficient and fair restructuring of the Bahamian Debtors under Bahamian law with the full support of the Bahamian Government and Bahamian courts." China Construction America, which Baha Mar has blamed for missing deadlines and causing it to seek bankruptcy protection, is also asking a judge to dismiss the case. Both motions are scheduled to be heard by Judge Kevin Carey on Aug. 17.